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- 4.3Spectrum Trading
- 4.4Roaming between Networks
4.2Cost SharingCost sharing has become a topical issue as the high auction prices paid for 3G licences together with expected infrastructure deployment costs combine to exert financial pressure on intending 3G operators64. However cost sharing is controversial because of its potential to restrict competition. Cost sharing should be distinguished from infrastructure sharing. Under cost sharing, operators jointly construct and own network components while under infrastructure sharing one operator pays for the right to use another operator’s infrastructure. There is concern that two operators building a network together are unlikely to compete as vigorously against each other as they would against other operators. Another concern is that by allowing cost sharing, regulators will, in effect, be rewriting the terms of the 3G licences already granted and that such changes in the rules retrospectively would set a disconcerting precedent. In response to such concerns, in June 2001, RegTP, Germany's telecommunication regulator, clarified its earlier announcement of support for cost sharing, making it clear that 3G operators would be allowed to share only certain parts of their network infrastructure, such as towers and antennae65. In fact, some of these parts are already shared on today's 2G networks. RegTP declared that each operator would still have to build its own "backbone" network linking base stations together. And sharing would be permitted only in such a way that, if one operator's network malfunctions or is shut down, other operators are not affected. Nevertheless, despite such restrictions on cost sharing arrangements, since towers and antennae account for a significant portion of overall costs, sharing these physical items can lead to savings of around 20%-40% of total deployment costs66 and this is a considerable saving. The stance taken by Germany's regulator seems to occupy the pragmatic middle ground between the position in the Netherlands, where cost sharing is prohibited altogether, and in Sweden, where even closer co-operation between operators is allowed. 4.3Spectrum TradingAnother issue relating to spectrum management is whether spectrum trading should be permitted? Under new legislation proposed by the European Commission67 secondary trading of radio spectrum would be allowed in order to provide for improved usage of this scarce resource. Economists have long argued that spectrum trading has the potential to increase economic efficiency68 and accordingly should be permitted. They point out that if trade occurs, this signals that some gains are being made by both parties. Thus spectrum trading should be prohibited only when it would lead to market failure. Otherwise there seems little reason for opposing it. 4.4Roaming between Networks3G operators will roll out their networks against a background of a range of competing GPRS and GSM services. Third-generation handsets will therefore need to roam between 2G, 3G, GPRS and GSM networks in Europe, between PDC and wideband CDMA (W-CDMA) in Japan and between time division multiple access (TDMA)/code division multiple access (CDMA) in the Americas. There may also be a need for roaming between different implementations of the 3G standard, such as Wideband CDMA (W-CDMA) and CDMA-2000. W-CDMA is the radio access technology selected by ETSI (European Telecommunications Standards Institute) in January 1998 for wideband radio access to support third generation multimedia services in Europe. Handset companies wishing to break into new regions will therefore still need to acquire technology compatible with the second-generation networks to operate in their new target markets. Unlike the 2G handset market where manufacturers are strong only in regions deploying specific network standards (e.g., GSM, CDMA or PDC), the 3G system even provides the potential for players to operate on a global basis, although not without having to resolve a number of problems (discussed in section 6). For instance, Japanese and European manufacturers will need access to each other’s 2G technologies if they are to succeed in each other’s markets. National roaming is a key requirement for the success of 3G systems. Guaranteed access of a new entrant 3G operator to an existing mobile operator’s 2G networks would allow the new entrant to compete on a more equal footing with the existing mobile operators while providing the necessary commercial incentive to roll out its 3G network. Most EU Member States are planning to mandate national roaming between third-generation and second-generation networks, in order to facilitate the establishment of competitive networks by 3G operators who do not own a second-generation network in the same territory. However, some countries, for example, Germany and the Netherlands, have not provided for this as a matter of law but will leave it to commercial negotiation. Most of these national roaming obligations will be for a limited time, reflecting the anticipated roll-out period for third-generation networks. They are normally applicable only to national roaming from 3G to 2G networks (and vice versa), rather than also between 2G networks. However, in Denmark and Italy, regulatory provision does exist to require national roaming between second-generation networks in certain circumstances, while in Sweden, a new entrant with a combined second-generation and third-generation licence would also have national roaming rights. In addition to mandated national roaming, additional regulatory requirements (e.g., concerning roaming pricing and conditions), are likely to be necessary to ensure effective roaming conditions to enable customers to get the benefits of 3G service at realistic and affordable prices. Rigorous implementation of regulatory policy Establishing licence conditions is necessary but not enough. Also required are the regulatory rules to implement the licence conditions and their implementation promptly, vigorously and pro-competitively. The development of appropriate pricing principles that can be used by arbitrators in resolving disputes on the wholesale pricing of 3G roaming services is essential for the successful implementation of 3G roaming arrangements. Roaming is essentially the resale by one operator of network capacity owned by another operator. As such it should be distinguished from interconnection which involves the physical connection of networks and the purchase by one operator of network functionality which it then combines with its own network functionality to deliver services. One approach that has been used widely for the wholesale pricing of resale services involves establishing a price based on retail prices less avoidable costs. This retail minus approach ensures that when a 3G operator acquires the roaming service, it does not incur any of the costs of the retail functions associated with the supply of the service. This is achieved by subtracting, from the retail price of a mobile call, the ‘avoidable cost’ the network owner would avoid in the long run if it ceased supplying mobile services in the retail market. In implementing the retail-minus pricing approach, it would be necessary to determine an appropriate basis for both the retail starting price and the costs that should be deducted from it. Determining the appropriate retail price to be used as the basis of the ‘retail price minus avoidable cost’ methodology is a difficult exercise since in practice there will be a range of prices in the market for the supply of mobile services. These prices will depend on the monthly fee versus airtime package selected by the customer and will also depend on the value added services being provided as part of the package. One method to overcome this problem is to establish the retail price with reference to the average revenue from providing to all customers those services that would be available to a competitor as part of the roaming package. This will include revenues from connections, rentals and calls. Retail revenues for the services provided under a roaming agreement would, in practice, be calculated separately for different services and for peak and off-peak periods. Governments also need to consider whether it would appropriate to introduce an integrated package of competitive safeguards that are designed to promote sustainable competition. These safeguards are primarily aimed at ensuring that dominant or incumbent carriers do not abuse their position to unfairly restrict the operation of new entrants. These anti-competitive provisions can act as safeguards to ensure that roaming charges are not used by incumbent operators to increase barriers to entry faced by 3G operators in both domestic and international markets. They can also be used more generally to prevent incumbent fixed and mobile operators from engaging in behaviour aimed at damaging 3G competitors. Anti-competitive provisions can include:
These rules are designed to limit the opportunities for a dominant carrier to selectively target individual customers at special prices not available or known to anyone else. Discriminatory discounts could be permitted if they are cost justified and are not otherwise affecting competition. General discounts could also be permitted if they are available to a broad group or class of customers. Directory: osg -> spu spu -> 3g mobile Policy: The Case of Sweden spu -> The case of ghana spu -> Contents : Introduction Part a the themes spu -> 3g mobile Licensing Policy spu -> Telecom network migration to ip and its impact on the future of telecommunications spu -> Colombia: ip telephony and the Internet spu -> Itu workshop on creating trust in critical network infrastructures spu -> Nternational spu -> Peru: ip telephony and the Internet Download 495.42 Kb. Share with your friends:
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